India has seen a boom in fintech startups, especially since 2016 when demonetisation kicked in and when the Indian government introduced the UPI platform. These two developments ushered many Indians to adopt digital payments and technologies.
To add to this digital finance inclusion spree, Reliance Jio introduced low-cost 4G telecom services, which have given the right stimulus to the payment infrastructure. Subsequently, the Indian government also simplified the taxation process for goods and services with the implementation of the GST. All this means the Indian fintech ecosystem received a massive impetus and this is evident in the number of financial technology startups in the country.
According to Inc42’s State of Indian Startup Ecosystem Report 2018, there are about 2,700 fintech startups in the country and India has an adoption rate of 72% for digital payment solutions, which is the highest in the world.
Mumbai has long been known as the financial capital of India with the country’s largest banks and top financial regulators based in the city. The fintech revolution however began in Bengaluru and while Mumbai is home to operations of a number of fintech startups, it trails Bengaluru in the number of fintech startups and Delhi, which is the top city in India in terms of fintech fundings. It is interesting to note that although Mumbai has more startups, the total funding is less than half of what Delhi draws. The Mumbai Fintech Hub program want’s to change that.
For Suniti Nanda, however, beating Bengaluru or any other Indian city is not the point. The government of Maharashtra’s chief fintech officer told Inc42 that the goal of the state’s fintech programme is to “make Mumbai one of the top global fintech hubs”.
Nanda and her team are trying to map out a strategy for the Mumbai Fintech Hub program that is run by the state government which is trying to address fintech issues on a national level.
“Our goal is not to surpass Bengaluru. I know this a metric to look at but this is not the only metric. India has more than 2000 Fintech startups and when we are talking about fintech globally, India does not come up as a hub even though we have many startups and that means something is not right somewhere, it could be quality of innovation, marketing, or need hand holding or helping entities come to India, “ said Nanda, who was earlier director of India Innovation at Barclays.
The larger idea that Nanda draws upon is that the goal of Mumbai Fintech Hub is not to get people to set up their operation in Maharashtra but to give the right opportunity and support to fintech startups across the country irrespective of where they are located.
It might sound altruistic, but the idea behind having an open mandate is that fintech cannot bloom in isolation in one state alone. It will need a comprehensive support ecosystem from every state and the support has to be proactive rather than reactive, Nanda added.
Maharashtra government’s fintech policy gave it an early mover advantage in state-backed fintech innovation. It is the first state in the country to have its own separate fintech policy. Getting Mumbai mentioned more often in discussions about top startups in the country is also another key factor.
“If there is good fintech innovation in Hyderabad or Mohali, we strongly believe we would love to support them and after that, if the entity wants to set up an office or tech support in Mumbai, that is a different discussion. But when it comes to overall innovation, as a country we have to move forward on Fintech,” said Nanda.
We spoke with Nanda, who is leading the team behind Mumbai Fintech Hub, about the future of the programme, what the government’s fintech hub is looking to do differently than other state-run incubators and the challenges in fintech inclusion and penetration. Here are the excerpts:
Inc42: It’s been a year since the fintech policy was launched in Maharashtra, what are currently some of the immediate use cases that the Mumbai Fintech Hub is looking to solve?
Suniti Nanda: So the policy came out last year and in the first year we have primarily looked at getting a base setup for fintech startups and we took some measures like going live with fintech registry where we have more than 270 fintech startups registered and once they are registered, it is easier for us to profile them so that we can tailor our programmes better.
We partnered with key accelerators and incubators, like Barclays, Zone Startups, etc. It is not about creating competition but more about collaboration. We did one multi-partner accelerator where we tried to draw a comparison with a corporate accelerator. In this experiment we got 10 industry partners like NPCI, Fino Payments bank and PayU to come on board with us. It was experimentation to see how startups benefit from this type of model which has a mix of corporates, investors and the government under one roof.
Inc42: What were some of the key findings and how is it different from regular corporate or bank-led accelerators?
Suniti Nanda: One of the key things here is that it is easier to catalyse deals when the government comes on board. I was running a corporate accelerator myself at Barclays and a single accelerator model has its own advantages but a multi-partner programme creates a different kind of access which can produce more opportunities in a short period as the diversity of participants means more opportunities.
People are seeing the value, banks are on board and it is cost effective. We can bring synergy among participants in trying to solve the problems faced by the industry.
In the coming year, we are looking at four such accelerators which will focus on insurance, finance, blockchain and AI, and there also be a different accelerator programme for government use-cases.
Inc42: How do you plan to help with fundraising for these startups?
Suniti Nanda: For the year to come, we are creating an investor platform and the key thought here is that the sell side will have the fintech startups and the buy side will have investor ecosystem and financial institutes. If you are looking to partner with a particular corporate, that matchmaking can also be done.
Next month onwards we will be doing a global investor roadshow where we will onboard global investors and fintech companies looking to enter India and we can help play the role of a matchmaker, helping these companies partner with smaller players.
We are also looking at creating a fund — right now we have grants scheme — which will continuously look at entities and support them. It will not be like a fund of funds but we will run it ourselves where we can build stronger relationships and provide better mentoring. It will be a continuous process as compared to a grant system which is for a tenure of three years.
Inc42: What are some of the challenges you are facing, the rental cost must be a pain point for startups?
Suniti Nanda: Rental cost was indeed one of the key points that came up but let’s qualify that a little. Does everyone get to be at BKC? I am not sure. ,are Navi Mumbai rentals comparable to Bengaluru? Yes. So there are various aspects.
We rolled out a scheme wherein we are reimbursing annual rents up to INR 4 lakh (about $5.8K) for a period of three years and have already done this for 50 startups last year.
One of the key challenges for us is around talent, the regular coding skills are not good enough. There is a huge talent gap and that’s why we have defined education as a focus vertical.
We are working with institutes that are bringing fintech courses and already colleges like ITM are offering a two-year fintech course and SP Jain also has a 9-month course specialising in fintech. We are launching a fintech education platform and will be rolling it out to eight institutes where we tailor content with the help of banks and tech companies such as Kotak, ICICI and Amazon to create content and also offer projects or internship opportunities.
Inc42: To people looking at this programme from the outside, what would you say?
Suniti Nanda: The message that I want to convey to the ecosystem is that we have been working in silos till now and we might be neighbours but we don’t know what is happening next door and the intent of collaboration is missing. Let’s work together and help each other. We have the talent and resources to compete with Singapore and London. It can be done.
(This interview has been lightly edited and condensed for clarity.)